Mobile app
food delivery app

How online food delivery apps make money?

The online food delivery business is on fire across the world. While Covid19 induced lockdowns have added woes for many businesses, food delivery businesses have been banking huge profits. The global revenue for the online food delivery revenue was 107.44 billion U.S. dollars in 2019. By 2023, the market is expected to grow at a rate of 11.51% (CAGR) to reach 154.34 billion U.S. dollars.

food delivery apps

People guess from common sense that online food delivery apps make money by delivering food and earning a commission on it. But there are plenty of other ways these food delivery apps make money. In this post, we are going to reveal all the revenue streams a business owner can use to make loads of money.

How Do Food Delivery Apps Work?

Food delivery apps simplify the delivery of meals from local restaurants or food cooperatives. Online food delivery apps allow user to order from a wide variety of food with a single tap on a mobile phone.

How food delivery app work

So, whether you are already in the food business or are planning to launch one, this post will immensely help you to understand the nuances of the online food delivery business in detail. Let’s get started.

How online food delivery apps make money?

1. Delivery Charges

Your online food delivery app is a bridge between the restaurant and the customer, who wants to have the sumptuous food home delivered. Since most local restaurants do not have or do not want to have delivery staff, they prefer home delivery services by the app owners like you.

Either you can have a fixed/flat charge for specific kilometres or you can ask for a percentage of commission on a per-order-basis. The standard percentage of delivery charges varies from 10% to 30% of the food order value.

This is the most sustainable revenue stream as no one minds paying for delivering food. Usually, restaurants include delivery costs in the bill, which is paid to the delivery app business owners.

2. Transaction Commission

Since the transaction of food orders is happening through your food delivery app, you have the right to charge a commission on each completed transaction. This is a steady revenue stream as most restaurants agree upon paying a fixed transaction commission, usually up to 10% to the food mobile app owners.

3. Advertisements Fee (Premium Listings)

Advertisements are everywhere across the internet. Whether you are reading a news article on BBC or searching for something on Google. You will find promoted stories on all the news blogs. Similarly, Google returns the search results with ads on top of all the SERPs (Search Engine Result Page). As a business owner of the online food delivery app, you can command a premium to list the restaurants on top or at premium slots in your app.

This is a win-win for you and the restaurant owners as their listing gets more views, resulting in higher orders. As a business owner, you make money by charging fees for the advertisements as well as transaction and delivery commissions.

4. Payment Gateway Charges

This is a ninja trick to make extra money through your online food delivery app. Once you attain a sizeable daily transaction value, you can negotiate with the payment gateways to reduce the charges. Since this is your internal arrangement, therefore, you are not obliged to share this with the restaurant owners.

For example, you can negotiate to pay the following charges to the payment gateway company:

Credit Cards: 1.60%
Debit Cards: 1.25%
Net Banking: 0.9%

Whereas, you can command the following charges from the restaurant owners:

Credit Cards: 1.75%
Debit Cards: 1.50%
Net Banking: 1.20%

As you can see from above, you can make more money by charging the difference amount in the payment gateway charges. Since you will be charging as per the guidelines of the statutory bodies, you are in the safe zone. Please note that the above charges are for illustration purposes only.

5. Make Money Via Google Admob

Just like Google Adsense, which is essentially for youtube and blogs, you can use Google Admob to monetise your online food delivery app. Google Admob displays ads of the advertisers within the apps. You make money in two ways: impressions and clicks. Revenue is calculated per 1000 impressions, known as RPM. Then there is an RPC (Revenue Per Click) model also, where you make money when someone clicks on the advertisement. The RPM varies from country to country.

In India, a business owner can expect to make up to USD 3 per 1000 views. This means as a business owner who has 10000 visitors per day, you stand to pocket an extra sum of around USD 30 (INR 2250 approximately) per day as a side income!

6. Make Money From Third-Party Advertisers

Just like Google Admob, which displays third party advertisements on mobile apps, you can directly display relevant ads of the advertisers and make even more money. Since you will not be sharing the revenue with an intermediary (like Google Admob), you will make even more money with this revenue model.

Final Thoughts

As you can see from the above, there are more ways to make money through online food delivery apps. Food-related businesses can never go out of demand. Online food delivery apps work as jet-packs for the local restaurants as their businesses soar owing to higher reach and deliverability. As a business owner, you bank loads of money as your business partners (restaurants) flourish.

Goes without saying, if you are a fence-sitter, not sure whether to take a plunge in this burgeoning online food delivery market, this is the best time to ride on the bandwagon. The food market will continue to thrive, while the food delivery market is poised to grow even faster!

Want to know more about food delivery app development? Our experts have immense experience in food app development, feel free to get in touch with them today! They will be happy to discuss your idea and help you chart the complete pathway to success! After all, we are just not your software vendor, we are your success partners!

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