Startup ideas in the food industry always have a chance of survival. Case in point: people need food, and a lot of the time want it delivered right to their door.
City dwellers are so busy hustling at work that they’re often too tired to cook. Isn’t it wonderful to have the ability to order food you like and have it delivered to your doorstep within minutes? What about those weekends when you want to eat out but are too lazy to get ready and go to a restaurant? Or when you’re inviting friends to a party and need to make food arrangements? Or (not so joyful, but very topical) quarantine has kicked in and it’s impossible to go out? These situations are no longer a problem, because now you can order your food in a few taps!
So, let’s see how to make a food delivery app you’re thinking about, and what it might take.
Table of Contents:
- The Food Delivery Business in 2020
- Market Value and Revenue Overview
- What to Consider Before Developing a Food Delivery App
- Cost Estimation for a Food Delivery App
- Model Apps for Inspiration
- Actions Food Delivery Startups Should Take During the Coronavirus Outbreak
The Food Delivery Business in 2020
Economic activity around the world has taken a hit due to COVID-19, but the online food ordering industry is set to buck the trend. In fact, in a survey, 41.7% of the people surveyed (U.S. consumers surveyed in March 2020) were in favor of ordering food online.
The food industry requires a human-touch element. Given recent events, social distancing and contactless transactions are going to be the mantra for months (if not years) to come. Therefore, businesses that incorporate contactless, hygienic delivery of essential services will have a head start on the competition. This is where online food ordering is uniquely positioned to turn things around quickly.
The mobile intelligence website Apptopia reports that grocery ordering apps have been downloaded in record numbers during the pandemic. Given the nature of its business, online food ordering is well positioned to recover and outperform itself, as people will prefer to have their food delivered at home rather than risk going out.
So it’s a good time to start a food delivery business. But what about the other important parameters?
Market Value and Revenue Overview
Statista estimates the online food delivery market will be $134 billion in 2020. The market is expected to grow to $184 billion by 2024.
The numbers clearly indicate a robust market with demand strong enough to maintain growth even in tough economic conditions. Another interesting fact is that China and the United States contribute to over 70% of the online food delivery market. The global market penetration rate is still less than 10%.
Grubhub, Uber Eats, and DoorDash have cracked the online food delivery code. Their technical expertise has propelled them to over 70% market share. This is a global trend, in which a handful of apps control the entire online delivery industry in a specific region. The best part is that the companies don’t own a single restaurant – they just know how to connect restaurants with customers.
Food delivery apps might all seem the same to the end-user, but all the top apps are built on specific strategies and operate using different business models. Other than convenience, they offer a myriad of features (personalization, user experience, order status, and live tracking, etc.) that make them stand out.
What to Consider Before Developing a Food Delivery App
So, how does a food delivery app work? We have broken out the major points to ponder to help you strategize your development and launch.
Let’s take a detailed look at the different steps required.
Define Your Niche and Research Your Target Market
Every product aimed at the masses needs market research. It lets you gauge the consumers’ pulse, their pain points and expectations. Answering these questions will provide valuable insight as you design and develop your app:
- Which age group is your primary target?
- What personas would make ideal consumers?
- What cuisines would you offer – vegan/gluten-free/Italian/Mediterranian/Mexican, or a mix?
- Which geographical area will you start in?
- What is the consumer demographic of that area? What kind of food do they like?
- How will your offerings (food, tech, and delivery) differ from existing ones?
Your app has to keep up with the latest trends to stay relevant. It should be simple enough for elders and sophisticated enough to appeal to a trendy, tech-savvy group of digital natives and millennials.
Think about the elderly, who are unlikely to be as technologically aware as the younger generation. To satisfy this group, have a simplified ordering process where they can just pick their order, enter their contact details and address, and pay via their preferred medium (online/offline). Having a simplified landing page will serve this purpose, as a feature-loaded screen can be intimidating.
A tech-savvy customer, on the other hand, demands the best of everything – convenience, speed, professionalism, and quality. You no longer have an option of choosing one over the other. You’ll need to gradually broaden your presence to smart devices, social media handles, digital assistants, chatbots, etc. – and when you do, you’ll be ready to provide what the customer wants. Here are some contemporary trends:
- Instant ordering
- One-touch payment
- On-time delivery
- Multi-device availability
- Voice assistant-enabled interactions (Alexa/Siri/”OK Google, where’s my pizza order?”)
- Social media integration (Dominos lets you order a pizza by simply tweeting a pizza emoji)
Choose a food delivery model
This is another key decision that will shape your entire business. How will you deliver food? Will you build your own logistics like UberEats, or bring a logistics partner on board to facilitate delivery?
Here are the popular delivery models operated by top apps:
The Aggregator (Order-only) Model
Your app is an aggregator, i.e. a common platform that brings together restaurants and customers. It lets customers place orders, and restaurants deliver them. This model is relatively simple to operate, as you don’t have to build your own delivery network. The typical commission ranges from 10% – 30% of the order value. Zomato is successfully using this model.
This is a tried and tested model across industries and has proven very successful. Your app would be a common platform for consumers and restaurants that enables the demand side and supply side to interact with each other.
This approach is easy to get started with, but your reach will be limited to restaurants that have their own delivery service, which is an additional cost to them.
Order and Delivery/Logistics Model
In this model, you’re responsible for accepting customer orders, sending them to restaurants, and having the orders delivered. It is complex to build, but more profitable in the long run.
The upside is that once you build a delivery network, you can sign up restaurants of all sizes – whether or not they have their own delivery staff. In fact, it will only encourage new takeaway/delivery joints to open up. This is the model UberEats uses. It’s more profitable than the aggregator model, as you can charge 25% – 40% per order, depending on the distance to the customer.
Select App Features
The app will be your primary (perhaps only) contact point with the customer. It must be designed to keep the user at the center. There should be different versions of it for different user roles (customer, restaurant, delivery executive, admin).
Here is a food delivery app features list that would get your food delivery app development process underway:
- Registration – User onboarding should be short, secure, and seamless. Your customers do not want another set of credentials to manage. You can simplify this by enabling a Google/Facebook/Outlook based login or by offering guest ordering if they’re in a hurry. Mobile number and OTP based registration/login also offer convenience.
- Profile Management – Customers, admin, restaurants, and delivery agents all need to be able to keep their profiles updated. You don’t want to force your customers to enter their address every time they place an order. You need accurate addresses and contact details of all stakeholders at all times to avoid chaos.
- Search – An interactive search feature will help customers explore new dishes and restaurants. There should be filters to sort restaurants and dishes according to taste so customers can quickly find what they’re looking for.
- Recommendation lists – Display recommendations on the home page according to weather, mood, and cuisine will add to the x-factor of your app. Customers will be delighted to see popular breakfast/lunch/snack items without having to search for them when they open the app in the mornings/afternoons/evenings.
- Homepage Preferences – Showing favorite restaurants, dishes, and commonly ordered dishes on the homepage is another nifty feature. Users in the digital age value time over anything else and they’ll be hooked if features like these simplify the ordering process and save them a couple of minutes.
- Order placing and checkout – It’s a standard feature, but one you need to keep innovating. All e-commerce apps have a cart where customers can accumulate their orders. However, your food delivery app can go the extra mile and embed features such as cart monitoring and modifications. Many apps don’t allow mixing of dishes from multiple restaurants in one order, but this is where your app can differentiate itself.
- Order Tracking – This is a crucial feature that can keep the customer engaged. Just mentioning that your order will be delivered by such and such a time is not going to cut it. Break up that time and show him the exact status of his order (confirmed, prepared, packed, picked for delivery, the agent about to reach, etc.).
- Payment – Integrate all the popular payment gateways so that customers can pay using the medium of their choice. And yes, having cash on delivery is a must.
- Ratings and Reviews – This works on three levels – restaurant, dish, and delivery agent. It will keep your restaurant partners and agents on their toes, and customers will have a trusted information pool to help them with their decision making.
- Notifications – You need to notify your users when their order is about to arrive, the latest deals, etc. You can do this either via push notifications or SMS.
- Loyalty Program – People like a little extra bang for their buck. In addition to offering signup rewards, your food delivery app design should include customized loyalty programs based on each customer’s order history. That’ll make them return to your app again and again.
Select Your Technology Stack
Once you consolidate your app features, you need to zero in on the technology that will help you bring your idea alive. Given our extensive experience with online apps for food delivery, we recommend the following:
- User onboarding and login – Instead of asking your users to create another account and choose another password, give them the option to register via a social media account. Facebook/Google Software Development Kits (SDK) are readily available for enabling this. Not only will this keep things convenient for your users, you won’t need to reinvent the wheel.
- Background tracking – An important feature that will let you use location-related data. While developing a native food delivery solution for one of our clients, we discovered that writing native code to start a foreground service works well.
- Restaurant listings – There are popular APIs (e.g., GrubHub or FourSquare) that do an excellent job of displaying location-specific recommendations.
- Secure payments – This module requires integration of all the major payment gateways and wallets, including Google Pay, Amazon Pay, Stripe, iOS Wallet, Netbanking. Keep the cash on delivery option open for those who avoid online transactions.
- Data storage – Customers and staff will trust you with their personal data. You need to justify their trust by choosing a secure storage system. Cloud storage solutions from a big player such as Amazon (AWS), Microsoft (Azure), and Google will give you much-needed peace of mind.
- Analytics – Google Analytics offers a powerful, easy to use solution for extracting insights from data. FireBase and Mix Panel are other reliable options.
Set a Budget
In the end, it’s all about managing money in the best possible way and maximizing your investment. These are the typical expenses incurred during the development of a new food delivery app:
- Planning and Development – Gathering requirements, defining functionalities, technical architecture, planning, and software development are the core activities. Reserve a portion of your budget (typically 30-50%) for hiring quality professionals who would drive this phase.
- Meetings – Strategizing, brainstorming, and collaboration require stakeholders to come together, which demands a budget allocation.
- Testing – Do not cut corners here. Set aside a part of your budget for a good testing team and the tools they need to do their work.
- Launch, Promotion & Marketing – All your hard work will reap rewards only if you draw in the right audience. This is where marketing and promotion professionals come in. It’s your job to find them.
- Customized website – Ready-made website templates might seem cost-effective, but they don’t engage users in the same way a custom-built website does.
- SEO – Get your website content written by professionals who know Search Engine Optimization (SEO) concepts inside out. Add sharing buttons to your content and keep it updated – this will guarantee continuous traffic through audience engagement.
Cost Estimation for a Food Delivery App
The cost of the food delivery app can vary, depending upon the choice of features, technology, etc. Your technical team is best placed to estimate the overall cost of app development, especially after they go through the discovery phase, in which a high-level requirements document will be elaborated on to gain a better understanding of the overall plan and expenses.
The discovery phase typically takes somewhere between a month to a month and a half. This is when you crystallize all your ideas and your app starts to take shape. Requirements, functional specifications, UX design, and prototyping phases will help you define the scope and determine a direction for the project.
The actual cost of the app is a function of effort, expertise, and hourly rates. Here’s a broad breakdown of costs, which will give you a reasonable idea about total billable hours:
On an average, be prepared for a minimum of 140 billable hours. This can grow to 250 hours, depending on the exact features you want in your app. Please plan for an hourly rate of $40 and up to get quality software developers on board. You can hire developers or professionals on an hourly basis or for the entire project. There’s no fixed parameter that determines why/how either approach tops the other, as they both have their pros and cons.
These numbers are general guidelines. If you want a more detailed and accurate estimate, get in touch with us. We’ll be happy to evaluate your plan and generate a customized quote for your food delivery app.
Model Apps for Inspiration
Online food ordering and delivery is under continuous evolution and has to predict and adapt to changing consumer preferences. The best food delivery apps seldom rest on their laurels. They have a 360-degree view of what’s happening around them. They continuously brainstorm ideas for improvement to make food delivery safe, convenient, and unique.
Focused on Jordan’s capital city of Amman, Azyan is a platform for restaurants, customers, and delivery service providers. It delivers thousands of daily orders, each within 20 minutes. Its salient features are:
- Effective search filters
- Real-time order tracking
- Live map for location tracking
- A different mobile app for drivers
- An admin notification dashboard that highlights unpicked orders
Go through our Azyan case study to get a behind-the-scenes view about the app’s inception, operations and evolution.
Founded in 2013, DoorDash has already onboarded a sizable number of restaurant partners and delivery agents across the United States & Canada. Here’s what makes them tick:
- Recommended food outlets
- Listings of restaurants offering free delivery
- Highlighted customized offers
- Recommendations of special menu items from each restaurant
- Real-time order monitoring
- DoorDash Delight, a scoring/review system that reflects customer satisfaction
In 2015, Uber decided to cash in on its brand value by launching an app-based food delivery service. It utilized its logistics to start an order-and-delivery business model which has been a huge success. Here are some of its top features:
- Analytics-driven customized recommendations
- Advanced search filters
- Accurate, real-time order tracking
- Customizable delivery options (call when here, don’t ring the bell, leave it with security, etc.).
Instacart has differentiated itself from other food delivery apps by delivering both food and grocery items to customers. It focuses on hyperlocal delivery and has footprints in major U.S. cities such as Los Angeles, Miami, New York City, Chicago, Austin, Washington D.C., Houston, Atlanta, to name a few.
It delivers its orders the same day, mostly within an hour. It focuses on delivering from the customers’ neighborhood stores.
The features that stand out on its app are:
- Easy Sign Up for Users, Drivers, and Storekeepers
- Advanced functionalities packed into a friendly user interface
- Complete Responsive Grid
- Easy search with filters
- Rating & Review Options for both Store & Driver
- Stores multiple addresses
- Easy cancellations
Actions Food Delivery Startups Should Take During the Coronavirus Outbreak
The COVID-19 pandemic is forcing businesses to change the way they work. Food delivery is a sensitive industry, and you need to go the extra mile to convince your customers that you adhere to the highest safety and hygiene standards. To do that, consider the following:
- Online Payments – These eliminate human contact and worries about cash management.
- No-contact handover – Customers want to minimise contact. Hence the need to adapt to this desire and ensure contactless delivery. Instructing agents to place the package at a predetermined spot on the customer’s premises will become an essential security measure.
- Sanitization and gloves – Couriers equipped with masks, sanitizers, and gloves will go a long way to prevent transmission of the virus. They also reflect professionalism.
- Contactless takeaway – Labeled orders get picked up from a designated spot to eliminate human contact.
- Working remotely – Staff involved in planning and administration should work remotely. In addition to eliminating human contact, this is also a good way to promote sustainability, as it reduces traffic, pollution, and stress.
No matter how tough the economic scenario, good business models always put customers at the center of everything they do. By doing so, the business stands to gain and sustain a competitive advantage over others. Apps for food delivery have become a necessity rather than a luxury, as many governments have categorized online food and grocery delivery as an “essential” service.
Therefore, put on your thinking cap, work on the plan for your app, and get the ball rolling. If you need professional consultation to overcome challenges, fill out our contact form and our representatives will respond to your queries.