How do food delivery apps make money

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With the increase in demand for food being delivered these days you may be mistaken into believing that the only profit a food app makes is via the sales it conveys for each food business. You’d be wrong! Food delivery start-ups are under incredible pressure to make profit at every turn so that it can compete with the top names out there.

The Four Key Strategies

There are four simple strategies that food delivery start-ups can employ to make their apps pay for themselves.

Delivery Charges

A food delivery app is usually used when a group of takeaways are unable to provide their own delivery service but want to make money from people ordering a takeaway.

This means that a food app can charge a fee for collecting that food and delivering it to the customer’s door without them having to move off the sofa. The delivery fee can be based upon distance travelled or just one fee for all orders, either way it is guaranteed income per order.

The great thing about using a delivery charge is that it is paid for by the customer as they order and is immediately deposited into the food delivery app bank account. It may seem like a simple strategy but simple is often the most effective and makes the best profits.

Commission Per Order

There is a certain logic that if you are providing a service you can expect to be reimbursed by the person or business that is benefitting from your work. This is as true for food delivery start-ups as it is for any other business out there. If a food delivery app is enabling a takeaway to sell more food to more people then commission per order is an apt way to get paid for the work of a food delivery app.

The percentage commission would need to be negotiated either on a restaurant by restaurant basis or by a flat fee that is charged to all restaurants that sign up for the delivery app service.

Premium Hour Operations

One of the lesser used strategies is using the busy periods to make more money. By charging a premium amount for delivery at peak times then the food delivery app is capable to delivering more profit.

There are issues with offering a Premium Hour service in that customers may wait to order if they want to use your app or, worst case scenario, they may move their business to an app that doesn’t charge premiums for specific times. The logic when using a premium is to use it wisely and in areas where the food app may not be able to keep up with the demand for food.

In App Advertising

The final way an app could make money is by offering advertising to the restaurants it works with. By charging a fee, the restaurant can appear, for a limited time, at the top of the listings or have a banner ad in the app. This gives them the chance to be seen more and to enjoy more orders.

As this is on a timed rotation there is plenty of opportunities for each restaurant to benefit from this service and for the app to maximize potential income.

Food delivery start-ups have a great chance of success in a world where connivence is paid for daily. The key to success is ensuring that any food delivery app is maximizing potential profit consistently and in as many ways as possible.