- Market Overview
- How does local delivery food apps make money?
- Required components for local food delivery app
- 3 Tips To Help You Get Started With Your Local Food Delivery App Development
There was an article, a few months ago, claiming that the local food delivery apps are making ‘chaos’ at schools (click here to read the full post). Well, the truth is, these apps are not just making a boom in schools; they have become even more mainstream in our today’s lifestyle. In fact, a recent Harris Poll also shows that 94% of Americans have ordered food online using a local food delivery app. In fact, Food On Click is also getting traction in the middle east countries; United Arab Emirates, Qatar, and Saudi Arabia.
Note that when we say “Local Food Delivery App”, we’re referring to apps that connect local food establishments with customers and handle the process of taking orders and their deliveries.
This food delivery is a thriving industry that has been disrupted since the arrival of on-demand food delivery apps like GrubHub, UberEat, Postmates, and DoorDash. Therefore, in this article, we’ve decided to take a closer look at what these apps do and how they’ve been created.
A local food delivery app can either offer customized dishes or any item from the menu of listed food establishments. Postmates, food delivery app, for example, makes it possible for its users to choose any item from the listed restaurants’ menu and delivers the order.
Postmates food delivery app takes care of the delivery of orders from restaurants and works in 14 cities across the US. Once a user places his order in the app, a local courier visits the food establishment and delivers the product to the user. According to the latest news from Crunchbase, “The on-demand local delivery app, Postmates has secured $300M in Series E round of funding.” The round was led by Tiger Global Management. Furthermore, on 10 Jan’18, the on-demand food delivery app, Postmates has recently secured $100M in Series F round of funding, led by Tiger Global Management, BlackRock, and Glynn Capital Management.” Currently, the total funding amount is $678M.
Doordash app, on the other hand, provides local delivery in 45 minutes. It currently provides its services in Boston, Chicago, Los Angeles, and Silicon Valley.
Apart from these food startups, Uber is also into local food delivery services. One of the food delivery options Uber launched is a lunch takeout service named UberFresh. The main idea behind UberFresh was to deliver fast food from local food establishments in about 10 minutes or less.
The delivery person of UberFresh is an Uber taxi driver who delivers your food for a flat $3 fee, regardless of the number of meals you order. Customers just have to define the delivery location and wait at the curbside for the Uber cab to arrive.
UberFresh is currently providing its services in different parts of Westside and West Hollywood areas.
After UberFresh, the company also launched another delivery service called UberRush.
It’s a New York based courier service which relies on freelance drivers on the bike as well as on foot for its delivery services. Furthermore, it competes with other local food delivery apps like Postmates.
For each delivery, the User usually pays $15-30 in UberRush. 80 percent of this delivery charge is kept by the UberRush driver and receives a complimentary iPhone, portable battery, and an Uber Messenger bag from the company. Although, startups like Postmates also provide complimentary iPhone with extra batteries to keep the GPS working.
How Does Local Food Delivery Apps Make Money?
Each local food delivery app has a different pricing scheme. In your local food delivery app, you can set a flat fee per delivery, part of which is kept by freelance drivers. Or, another way can be the amount that you upcharge on an item, or a commission fee that a restaurant has to pay for bringing in new orders and taking care of the delivery part.
The second strategy may get you bigger profit as you expand your business. Although, for initial marketing purposes, you may want to make your app completely free, with no commission from restaurants or from delivery charges, and no upcharges on items until your app gets some traction in the market.
When UberRush was launched in Santa Monica, users didn’t have to pay delivery fees or tips to drivers. Now, though, there is a $3 flat fee for the delivery.
The Postmates pricing starts with $5 and is determined by the distance of the delivery.
Doordash, on the other hand, has a flat $6 fee. In addition, the merchants in the Doordash network also have to pay a commission fee to help cover the company’s delivery fleet.
In summary, there are multiple methods for making money through a local food delivery app. The major challenge, however, is to make sure all required components are considered while developing mobile app.
Required Components For a Local Food Delivery App:
To develop a local food delivery app like Postmates or DoorDash, the following components are required:
- App Design
- API & Server
- Map Integration
- Database of Restaurants and Menus
- In-App Payment System
Let’s move forward and take a closer look at each of these components.
1 – App Design
Just like Postmates, the design of an on-demand food delivery app should transfer users to the desired result – Food Order.
Therefore, once a user is logged in, they should see a list of nearby restaurants, which they can scroll to select the one they like or prefer and make an order.
After preparing a design for your local delivery app, your mobile app will also need a backend.
2 – API & Server
Your local food delivery app will need to provide users with relevant menus and control the processes of ordering and delivery. That’s where most of the business logic of the service is located.
Being a food delivery startup, with API, it is easy to scale your food delivery service in case you want to add support for another platform or expand your services to new cities. In fact, with a public API, you can also provide third-party developers to embed order functions into their service, just like the Postmates delivery does.
3 – Map Integration
Since the food must be picked up at a particular restaurant and delivered to a specific location, Map integration is an essential component of your Postmates clone. You can use Google Maps or Openstreet Maps to locate users’ device. Although, you’ll also need to add the functionality to track orders in real-time so that users will know that their food is on the way.
4 – Database of Restaurants and Menus
This part is easiest to implement for your mobile app development team. The only difficulty, though, is data harvesting. The following data is essentially required for your local delivery app.
- List of restaurants along with their descriptions.
- Names of meals or dishes along with its prices.
- Pictures of all dishes on the menu.
The first version of restaurant list you can collect from Google. However, for menu and meal photos, you’ll have to contact restaurants and collect them yourself. Furthermore, you’ll also have to monitor their menu price changes to make the appropriate changes in your database. This is why you should start your local food delivery app startup in one city and then expand it over time.
5 – In-App Payment System
In-app payment system allows users to pay for their orders directly within your food delivery app. Unlike Postmates and DoorDash which offer only one payment method – Credit Card, you can use other online payment methods such as Paypal, Apple Pay, Android Pay, and Google Wallet in your local food delivery app.
For this in-app payment system, there are a lot of services available. For example, Uber uses Braintree.
Overall, the food delivery industry is one of the best industry where Uber for X model is operating successfully. Many big players, however, have covered many different markets across the globe. Therefore, to help you make sure you’re on the right track, we would like to share few tips to get you started.
3 Tips To Help You Get Started With Your Local Food Delivery App Development
1 – Start With Market Analysis
Whenever a client hires us for his mobile app development project, the first thing our business analyst recommends and starts with market analysis and target audience research. In fact, Postmates and many other successful on-demand apps for food delivery started their market invasion from this point.
How Does Postmates Work?
Postmates is one of the largest delivery startups providing on-demand delivery services in the USA. It delivers foods and drinks from different places to individuals who can’t find time to take a trip to the restaurant.
Their formula is simple. They deliver only what local cafes and restaurants have to offer. Their main target audience is young individuals who have no time to visit a good restaurant but owns a smartphone.
In simple terms, they’ve successfully combined mobile technologies with shipping and created a digital version of on-demand delivery. Their most distinguishing feature is that anybody can work as a courier for Postmates. It gets even better as Postmates lets its couriers decide their work schedule.
Moreover, the food ordering process is also simple as 1-2-3 in the Postmates app. Once a user makes an order and pays for it, one of the nearest courier to the place will accept it and start working. The user will receive delivery status and information right within the app as well as with a text message.
2 – Define a Business Model
All on-demand delivery businesses have pretty much the same commission-based business model. Although, Postmates has benefited the most out of it. This on-demand delivery app startup stands on three customer personas.
Users: These are the actual customers who are willing to pay extra money for their meals delivered at their doorsteps.
Local Cafes & Restaurants: These are the local food businesses such as Cafes, Pizza shops, and Restaurants who gets an excellent opportunity to increase their sales and get more exposure on Postmates courier app.
Postmate Couriers: These are the individuals looking for an opportunity to raise money by being a courier according to their own work schedules.
In a nutshell, being food delivery startups, your app users can get their food 24/7 at their doorstep, restaurants can get more brand exposure and increase their sales, and Postmates couriers get to keep 80% of the entire delivery fee along with working according to their availability.
3 – Partner With Local Restaurants and Cafes
The first thing you need to know about the food delivery market is that it is a whopping $70 billion industry. However, of that $70 billion, only $9 billion (roughly 13 percent) is online.
Therefore, you need to reach out to as many restaurants as possible to make sure that you’re being noticed by your competitors. A wide network of restaurants and cafes gives a new on-demand delivery startup enough of a push to get traction and win a good amount of share of the market.
How to do it?
There are different approaches to build relationships with restaurants and cafes. For instance, Eat24 and Grubhub build partnership with local restaurants by bringing down their delivery costs and then take a commission off all sales. They sign a contract with restaurants and enjoys a mutually beneficial arrangement which results in good exposure for restaurants and a constant flow of orders.
Postmates, on the other hand, chose a riskier approach for gathering client base. They were found that Postmates first delivered orders from restaurants they hadn’t signed any agreements with, then gathered feedback, and offered merchant program to only restaurants that proved to be profitable.
Seems like on-demand Postmates food delivery app is here to stay, which is why their variety in the market keeps growing as new food delivery startups enters the market. Therefore, your food delivery service should offer something newer, something of a higher level of service, in simple words – It should set your services apart from others.
Therefore, you need to ensure that you hire a mobile app development which can meet your expectations and has the experience of developing similar delivery apps.
Space-O Technologies, however, will be happy to answer all of your questions regarding Local Food Delivery App Development. Drop us a line by filling out the below form with your requirements, and our business analyst will get back to you within 24 hours.
And in the meantime, you can check out our Portfolio of Ninja Delivery, an on-demand delivery app, currently providing its services successfully in California.
For other Portfolio details, click here.