How Online Food Delivery Apps Make Money?

Online food delivery, despite the increasing competition, seems promising. In fact, the food delivery industry has grown so popular that it’s estimated to reach an incredible $200 billion by 2025. The inception of food delivery apps has made it easier for customers to place orders online without having to visit the restaurants. They can look for their favorite restaurants, view menus, place orders, and pay via apps from the comfort of their homes.

For restaurants, on the other hand, online food delivery apps help increase their orders and revenue.

So, how does food delivery work with apps? First, install it on your smartphone and then choose your favorite restaurant. Once you place your order, the restaurant is notified and starts preparing your food. Lastly, the food is delivered to your address. If you’re also planning to launch your own food delivery app, you might be wondering how you can make money delivering food. To answer this million-dollar question, we will discuss the major revenue streams of online food apps in this article.

Monetization techniques for online food delivery apps

Delivery charges: Online food delivery apps act as a bridge between customers and restaurants. If your restaurant doesn’t have a delivery team, your app can help deliver food for a fee, thereby reducing the burden for restaurants. Delivery fees can be a percentage of the meal price or a flat fee, depending on the distance. Let’s take Swiggy, for example. They charge a delivery fee of 30-35% on the order delivered. Another example of this is Deliveroo. As per a report, this one of the most popular online food apps made £129 million from delivering restaurant food to сustomers’ homes. They charge £2.50 to customers for each delivery and charge commission to restaurant owners (generally 10 percent of the order price).

The great thing about using this monetization technique is that it is paid by the customers and directly deposited into the bank account of the online food apps. Though it may sound like a simple strategy, it is the most effective and profitable way to earn money.

Check out the comparison table below that shows the delivery fees of popular online food delivery apps.

Peak hours: Another excellent way to make money delivering food is using the busy hours to make some extra cash. What do we mean by this? Well, you can charge a premium amount for delivering at odd hours or peak hours. This way you can make extra money and earn profits. For instance, how Uber Eats makes money? It sets surge pricing during lunch and dinner. At peak hours, they limit menus and locations and charge an extra fee to make them available.

But you need to keep in mind that all customers are not ready to pay a premium amount for your services. They might wait to order after peak hours or may shift to an app that doesn’t charge extra for peak hours. So, choose WISELY if you want to make money delivering food.

Commission: Another popular way to monetize your mobile food delivery app is via commission percentage. Online food apps can collaborate with restaurants on predefined commission rates. For instance, Just Eat is one of the popular food delivery apps that take cash and make money by charging commissions to restaurants on transactions. In the UK, Just Eat charges restaurants £699 to join the service and for each order placed through the website or app, it gets 13 -14% commission. Over 90% of the company’s revenue comes from commissions.

So, if a mobile food delivery app is enabling takeaways to sell more food, then the commission is an apt way to get paid. But the size of the commission may vary based on the restaurant level, its average revenue, and other factors.

Advertising: Advertising is another excellent way to earn money for  mobile food delivery apps. Online food apps can offer advertising to restaurants for a limited time period at additional cost. By advertising we mean, mobile food delivery apps can list a restaurant at the top search results for a specific time period. For instance, Swiggy charges money to restaurant owners to feature their restaurants in the app. Advantage? By being featured, restaurants are shown above others in search results and can attract way more customers as compared to their competitors. But make sure that you partner with those restaurants that have excellent customer feedback.

To conclude

Online food delivery is a promising business idea as evidenced by the success of popular companies like Just Eat and Swiggy. And if you have a mobile food delivery app, which collaborates with restaurants and is popular among users - you can easily earn money via commissions, delivery, and advertising. So, if you don’t have an app yet, it’s time to put your time and thoughts into building food delivery apps to make money and have a successful business in the future. In case you already have an app or want to list your company in our top Mobile App Development Companies Report, get in touch. We will be glad to help you!

Written By

Arpit Business Development Head

He is responsible for marketing programs, brand management, and corporate sponsorships. He thrives on challenges, particularly those that expand the company’s reach. Next to work, Shadow, his dog, immensely contributes to his happiness.

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