This year alone, the online food delivery market’s revenue is expected to reach US$1.22 tn.
The market is further expected to exhibit a compound annual growth rate (CAGR 2024-2029) of 9.38%. This means the market of food delivery is poised for exponential growth.
If you’re familiar with the online food delivery business model, you already know that it offers significant profit potential.
That being said, the question remains: How to kick-start your very own food delivery business?
If you too are wondering how to take a slice of the food delivery market, then you’ve come to the right place. Because, in this blog, we will explore industry insights and practical tips to help you launch and scale your on-demand food delivery business.
Excited? Then let’s get started.
Online Food Delivery Business Model
Food delivery businesses connect hungry customers to restaurant vendors through a digital platform like a mobile app or a website ordering page.
Through this digital interface, customers can browse menus, order their favorite food items, make payments, and even have them delivered to their homes—with just a few taps!
Truly, food delivery businesses are changing the way people order and this is how they do it:
Customer Login
Customers create an account on the ordering app after providing their contact information, delivery address, and payment details.
Restaurant Partnership
Most food delivery businesses partner with hyper-local restaurants to fulfill orders. Restaurants can enlist their menu, pricing, and other relevant information on the ordering app.
Ordering
Customers use the platform to browse menus, select dishes, customize orders, and place them online.
Order Processing
The platform receives the order and forwards it to the restaurant which then prepares the food according to the placed order.
Delivery Process
The platform assigns a delivery driver to pick up the food from the restaurant and deliver it to the customer’s address.
Payment
Customers typically pay for the food online through the ordering app or they can opt for cash on delivery. The app has gateways to handle payment transactions.
Revenue Model of Food Delivery Businesses
By now, you know that the business of food delivery apps is on the rise. While there is plenty of opportunity to grow in this market, there is also a lot of competition.
Hence, when running a food delivery business, you’ll need to generate multiple streams of income to sustain your workflow. A few of them are listed below:
- Commissions: Commission fees charged to the restaurant vendors are a core revenue driver for food delivery businesses. These fees typically range from 15% to 30% of the order value charged to restaurants.
- Delivery Fees: Customers pay a variable delivery fee based on factors like distance and order time.
- Subscription Fees: Premium memberships like Zomato Gold offer users perks like free deliveries and exclusive discounts in exchange for a monthly fee.
- Advertising: Restaurants pay extra for enhanced visibility and promotions within the ordering app.
- Booking & Ticketing: Some apps extend their services to include ticketing for events like concerts, as seen with Zomato’s Zomoland.
How to Start Your Online Food Delivery Business
Building a successful food delivery business entails a complex process.
It includes extensive market research, careful selection of a business model, tailored food ordering app development, seamless integration of third-party services, thorough testing to ensure a smooth user experience, and a robust marketing strategy to attract customers.
Starting a food delivery business may seem overwhelming, but don’t worry! Here’s a breakdown of the process with tips to make it easier.
Identify Your Customers
Start by researching your local market to understand the demand for food delivery services.
You can do so by studying your competitors and comprehending the needs of your ideal target demographics. Doing so will help you identify gaps in this market.
Determine your ideal customer base: individual consumers or corporate clients?
The consumer market, while large, typically involves many small orders and a wider delivery radius. Corporate catering, on the other hand, offers the potential for increased order volume and efficiency by serving multiple employees within a single location.
Define your USPs
Once you’ve decided which market to serve, you can refine your business to develop a unique selling proposition that differentiates you from other food delivery services.
For instance, if you’re focusing on corporate clients, consider specializing in tiffins, meal kits, and healthy snacks—a USP perfectly aligned with this market.
Next, carefully analyze the costs involved in fulfilling and delivering orders.
This includes ingredients, packaging, delivery costs, and driver wages. Based on this cost analysis, determine a profitable pricing structure and estimate your profit margins.
Get Necessary Licenses and Permits
Depending on what kind of food delivery business you want to run, it’s important to check the licenses and permits you’ll need to operate your business legally and safely.
Making mistakes in this step can land you in a world of legal fines, issues, and even business closure.
While requirements vary depending on location, always check with your local government agencies before setting up shop.
However, some common licenses you might need: are a food handler’s permit like FSSAI, GST registration, trade license, and an e-commerce registration.
You may also need a seller’s permit, which is required in most states to collect sales tax on your food delivery sales.
Finally, though not technically a license or permit, don’t forget insurance!
Consider getting auto insurance for your drivers, property insurance, and general liability insurance to protect yourself and your business in case of accidents.
Set up an Online Ordering System
An efficient online order management system is crucial for the success of any food delivery business.
The reason you need it is that you want to make it as easy as possible for your customers to order from your app.
Hence, here are some tips for setting up an online ordering system that’s fast, easy, and affordable:
Choose a Ready-made Food Delivery Solution
White-label solutions are perfect for food delivery startups. Because they are 100% customizable, pre-built, and can be deployed in less than a week!
Additionally, instead of hiring an app development team, you can just sign in, rebrand a white-label food delivery solution, and kick-start your business.
For instance, Deonde offers a white-label food delivery solution for startups. Deonde’s food delivery suite consists of the ordering app, the vendor app, the delivery driver app, and an admin panel.
All aspects of this solution are customizable, user-friendly, and intuitive.
Create a Highly Responsive & Adaptive App
A lot of your customers are going to browse your ordering app on their phones or tablets. Hence, you need to make sure that your online ordering system is mobile-friendly and highly responsive so that it works seamlessly across all devices. To ensure app durability, test it thoroughly before you launch.
Create a Simple Ordering Process
Make online ordering easy for your customers by using clear product descriptions, images, and pricing.
Keep the ordering process as streamlined as possible, avoiding unnecessary steps or complex navigation. Deonde understands the importance of UI/UX in a food ordering app—hence, we offer several templates to choose from. This way, you can get the most intuitive design for your app that actually works in line with your business model.
Focus on your Offerings
With all your licenses and permits lined up and an app that’s ready to be launched—you can now finalize your offerings and pricing strategy. For this, you’ll need to seek partnerships of hyper-local restaurants.
Building a robust network of restaurant partners is key to the success of your food delivery app.
Start by identifying and approaching restaurants that align with your target audience and service area. Clearly articulate the value proposition of partnering with your app, emphasizing benefits such as increased customer reach, streamlined order management, and potentially higher order volumes.
Negotiate mutually beneficial commission structures, considering factors like order volume, delivery distance, and the restaurant’s overall business model. Offer attractive incentives for early adopters and explore options for promotional collaborations.
Figure out Delivery Logistics
The quality of your delivery operations is at least as important as the quality of your food!
Food that arrives late, cold, or spoiled means lower customer satisfaction, and ultimately a business that may fail to take off.
Globally, 34% of online food delivery customers cite excessive wait times as their primary frustration. So, how will you overcome this pain point and deliver on time?
- Prioritize Speed and Accuracy: Implement efficient order processing systems, optimize kitchen workflows, and ensure timely order preparation.
- Optimize Delivery Routes: Utilize route optimization software to minimize travel time.
- Invest in Reliable Technology: Equip drivers with GPS-enabled devices and real-time order tracking systems to provide accurate ETAs to customers.
- Well-Trained Delivery Team: Provide drivers with clear instructions, proper training, and incentives for timely deliveries.
- Communicate Proactively: Keep customers informed about order status and any potential delays.
Build Your Brand
Nowadays, every business, whether it is online or offline, needs a website and a good branding strategy. Consider your website as the storefront for your entire business.
Hence, creating a consistent brand identity with an official logo, color scheme, and tagline that represents your business value is crucial. This will help your customers recognize and remember your business.
Creating a website will give you more control over your online presence as it will make it easier for customers to place delivery orders. Hence, design your food ordering website with clear CTAs and navigational buttons.
You can also make an online menu that showcases your unique dishes, post high-quality photos and videos of your food, and share stories about your journey as a business owner.
Launch and Promote your Business
Now that you have a fully functional app that’s ready for business, you need to launch it effectively and promote it to the right target audience. Here are some ways to start strong and keep running successfully:
Advertise: Use marketing channels like social media, paid ads, influencer collaboration, email marketing, and word of mouth to promote your business to potential customers.
Offer Promotions: Consider offering discounts or free delivery to attract new customers, and set up a loyalty program to encourage repeat orders.
Partner with Vendors: A marketing partnership with local vendors, cloud kitchens, cafes, and bakeries can help you offer bundled deals on your app to entice new customers.
Why go for Ready-made Food Delivery Solutions?
Because food delivery solutions like Deonde are pre-built and ready for deployment. With a few tweaks and changes, your on-demand food delivery app will be ready for launch in a matter of days.
Deonde allows you to customize, so you can edit features, elements, and styles to your liking.
Besides, pre-made white-labeling solutions like Deonde are extremely affordable! While food delivery app development from scratch is resource-intensive, SaaS-based white-label solutions like Deonde don’t need any hefty investments. Start with as little as $199/month!
Also, Deonde’s white-label food delivery app is open to API integrations. It supports over 30+ payment gateways for maximum user convenience.
Here’s a brief list of features supported by Deonde: user role management, call center dashboard, custom domain, vendor & driver settlements, and automatic driver allocation.
With these modules, you’ll outdo your competition and boost your food delivery business in no time.
Summary
The online food delivery market is experiencing explosive growth; thus creating a fertile ground for entrepreneurial ventures.
In this blog, we looked at insights, tips, and tricks to capitalize on this opportunity by developing your very own food delivery app.
By defining your unique selling proposition, building strong partnerships with restaurants, and delivering exceptional customer service—you too can successfully launch and scale your own food delivery business like Zomato or Uber Eats.
Starting and running your own food delivery business can be daunting. However, Deonde has your back.
From designing an intuitive ordering app, to branding your app, launching it, and providing customer support—Deonde helps you build a food delivery business from start to finish.
So what are you waiting for? Connect with Deonde today and get started with your food delivery business.
FAQs:
Define Online Food Delivery Business?
An online food delivery business is a digital platform that connects customers with local restaurants or food providers, facilitating the ordering and delivery of meals through a website or mobile application.
Is Online Food Delivery a Good Business?
This year alone, the online food delivery market’s revenue is expected to reach US$1.22 tn.
The market is further expected to exhibit a compound annual growth rate (CAGR 2024-2029) of 9.38%. This means the market of food delivery is poised for exponential growth. Hence, it’s safe to say that running a food delivery business is a great opportunity to boost profitability and scalability.
How Do Online Food Delivery Services Work?
The concept of on-demand food delivery services revolves around creating a digital ecosystem that seamlessly connects customers, food vendors, and delivery drivers. Customers browse through curated menus on a platform, place orders, and make digital payments. The platform then coordinates with restaurants or cloud kitchens to prepare the food. The prepared orders are then assigned to delivery partners, who deliver them to customers.
Can I Start my Food Delivery Business with a Subscription Model?
Yes, starting a food delivery business with a subscription model is an innovative approach that’s gaining traction in 2025. This business model involves customers paying a recurring fee in exchange for benefits like free delivery and exclusive discounts. The model is advantageous, as it provides predictable revenue streams and helps build customer loyalty.