How to Build a Food Delivery Site
In 2018, the gross revenue of the online food delivery market reached $ 80 billion and it is expected that by 2023 it will increase to $ 140 billion (+ 11% per year). At the same time, the average check in online orders is 23% higher. This suggests that the market is booming, so if you plan to build a food delivery site, now is the best time to do it. There are not so many competitors. From the article you will learn how to do it as efficiently as possible.
The traditional food delivery model is as follows: customers phone the local restaurant, place an order, and wait for the restaurant courier to deliver food to their doorstep. For many years this scheme has dominated the market, but now we are witnessing the emergence of online startups that use other business models for preparing and delivering food, taking this service to a new level.
McKinsey consulting firm divides these startups into three categories:
Sites-aggregators. They act as intermediaries between customers and numerous local restaurants, offering access to their menus through a single site or mobile application. When a client visits the aggregator site, he can view and compare the menus, prices, ratings and reviews for each restaurant and even the dish, and then place the order in a couple of clicks. After that, the service transfers the order for execution to the restaurant, where food is prepared and then delivered using its own couriers.
The most popular delivery aggregator sites are GrubHub, Just Eat, Delivery Hero, Foodpanda. They work worldwide, and they account for a large portion of the online food delivery market. For example, in 2015, Eat24 and GrubHub controlled more than 66% of the market (in 2017, GrubHub bought Eat24 for $ 287.5 million).
New Delivery Services. Like aggregator sites, they allow you to compare the menus of different restaurants and place orders at different local restaurants through one web or mobile application, but at the same time they also provide logistics for partner restaurants. Thus, new online food delivery services allow restaurants, pizzerias and cafes that never delivered food to their homes to enter this market.
This food delivery model is becoming popular as:
UberEATS, Postmates, Foodpanda and Caviar work on this scheme. Thanks to them, gourmets around the world got the opportunity to order not only pizza, fast food and Chinese food, but also dishes from elite restaurants and institutions that prepare healthy, children's, vegetarian and exotic foods.
Full delivery service on request. These are cloudy (or ghostly) kitchens, which, unlike aggregators and new food delivery services, do not work with third-party organizations (pizzerias, restaurants, cafes), and instead build their own kitchens and hire cooks who work only on online food delivery. Couriers at such platforms also have their own.
The largest cloud kitchen is Rebel Foods. It is an Indian chain that has received over $ 170 million in support from McKinsey, Coatue Management, Gojek and Goldman Sachs to build 100 new restaurants in Asia and the United Arab Emirates. The closest competitor is startup Deliveroo, which, under the leadership of Amazon, received $ 575 million in investment to conquer the world market.
Practice shows that it is better to start any project on the Internet with a limited area, and then gradually expand it as popularity grows. It’s easier to distinguish a site from competitors, get a stronger response from users and save on promotion. Food delivery sites typically target:
Region, Country. GrubHub, one of the most popular food ordering web platforms, started out with Chicago. Once the project became a regional hit, it turned its attention to San Francisco, then to New York and other US cities. GrubHub is now represented in 2400+ cities in the US and the UK.
You can go the same way: start work from one city and then expand your business to other regions. If you live in a country where there are no major players in online food delivery, it is best to start immediately with several of the largest cities in order to be the first to conquer an empty market.
Target audience. Among the busy people who more often than others order food delivery, there are three main target audiences: working specialists, parents and students. Each has its own needs of preference, which you can rely on when starting your site:
Type of kitchen. The last way to stand out at the start is to work with restaurants that cook certain types of dishes: homemade food, fast food, seafood, etc. You can also focus on establishments of Chinese, French, Hawaiian, Ukrainian or other cuisines. Here are some interesting restaurant niches:
This approach is only suitable for large cities, where there are many restaurants operating in one niche. For smaller cities it’s better to choose a different positioning method.
Role functions. When creating a food delivery site, you should divide its functionality into two groups of users (customers and restaurants), if it is an aggregator site, or into three groups (customers, restaurants and couriers) in all other cases. Each user group should have its own set of functions. Typically, this separation is as follows:
UI / UX design. When people order food online, they want to browse as simple and clean sites as possible, where nothing will distract them from the key action - ordering food. Therefore, you should not create something beyond creative or innovative. Better to focus on conciseness, simplicity and convenience.If you want to stand out among your competitors as much as possible, you can also integrate functions, for example, food delivery by drones, AR and VR elements for visualizing dishes or dish designers (the client decides what and how to cook).
Commission fee. The most popular way to monetize. The fee is usually charged from the restaurant, and the rate is from 5 to 30% depending on the level of the restaurant, its average income, location and other factors. This approach is used by Just Eat, Deliveroo and others
Rush Hour Visibility. Rush Hour Visibility Food delivery services may limit the visibility of restaurants listed during rush hour, depending on their location. That is, in normal times, customers see all restaurants within a 10-mile radius in listing, and during peak hours within 5 miles. If the restaurant wants customers to see it again, then they can activate this service for an additional fee. So does UberEats.
Advertising. A food delivery site may offer advertising for restaurants at an additional cost. This may be located on the cover page of the site with good load time, at the top of the listing and / or in the recommendations. This is one of the main sources of income for Swigg and UberEats.